Whether you’re considering a move to a retirement community like Piper Shores, or simply planning for the future of your estate – 2012 may be an excellent year to review your options. There are a number of federal laws that may change at the end of 2012, offering enormous opportunity for those planning an estate, selling a home, or planning for end of life care.
“Changes to federal tax laws that are scheduled to take effect in 2013 make 2012 a particularly opportune year to review estate planning options,” said Susan Thomas, Esq., an attorney at Epstein and O’Donovan, LLP. “The potential repeal of the Bush tax cuts and reduction in the federal estate and gift tax exemption in 2013 offer retirees and others a strong incentive to act now when it comes to selling capital assets or gifting portions of an estate to loved ones.”
Currently, the maximum federal tax rate for long-term capital gains and dividends is 15%. In 2013, absent Congressional action before the end of this year, the maximum tax rate will increase to 20% for capital gains and 39.6% for dividends. Similarly, the maximum income tax rate will increase from 35% to 39.6%. Concurrently, if Congress does not act, the federal estate tax exemption, now set at $5,120,000, will be reduced to $1 million. This combination of events makes 2012 an ideal time to consider the realization of capital gains and/or gift large portions of an estate to take advantage of the lowest income tax rates and highest gift tax exemption seen in decades. One bright note at the state level – the Maine estate tax exemption will increase to $2,000,000 starting in 2013.
Another valuable opportunity in 2012 is home sales. Due to the low rates for capital gains taxes available through the end of 2012, it is an ideal time for those considering moving – either to Piper Shores, or just to downsize – to sell their homes.
“In addition to the low capital gains tax rate, there is also a capital gains exclusion available for married homeowners (up to $500,000) or single taxpayers (up to $250,000) selling a primary residence who meet certain ownership and use requirements,” said attorney Thomas. “These favorable conditions make 2012 a particularly advantageous year for those considering selling their home prior to moving into a retirement community such as Piper Shores.”
Another important consideration for those planning a move to Piper Shores is the updating of Wills, Advance Health-Care Directives and Financial Powers of Attorney. Like most states, Maine has its own required statutory provisions and execution requirements. For this reason, it is advisable to have all documents reviewed and updated once residency has been established in Maine.
For more information about planning your estate prior to moving to Piper Shores, or the impending changes to federal tax structure, contact your financial advisor or estate attorney.